China's oil strategy is not conflicting with US interest

Jun 21, 2004 02:00 AM

As the oil price hiked recently, there was an obvious increase of reports on oil strategy in the US media, some of
which held that China's strategy on oil security ran contradictory to the US oil strategy.
Fiona Hill, senior researcher with US Brookings Institute and expert in international energy accepted an interview
with our correspondent.

Question: Recently we've seen many reports by the US media on China's oil and energy resource issue. In your opinion,
what kind of mentality does the report indicate?

Answer: The US people have generally realized that, China's economic growth has become a major driving force for
global economic (including the US economy) resurgence. Today, the US people have given up the fear of China's rise,
yet instead, they are worrying about the slowdown of China's economic growth.
Some of the reports by the US media represent that kind of worry: China's shortage of energy supply is likely to lead
to slower pace of China's economic growth, thus casting a shadow over the prospect of economic growth of the US and
even of the world.

Question: Some US media thought that China's oil strategy probably will affect US security of energy resource and
national interests. What do you think of it?

Answer: China's oil strategy will never go against that of the United States, no matter whether at present or in a
long time to come. The focus of the US government's policy on international energy resource is: how to reduce a new
possible world oil crisis to a minimum extent once the oil supply chain snaps in the Middle East. Therefore, a major
objective of the US policy on oil security is to safeguard that there is adequate oil in the international market as
ever, to ensure adequate supply to big oil consumers. It is the fundamental way to avoid conflict.
Moreover, as China and the United States have been mutually, increasingly dependent on each other in terms of trade
and investment etc. the connections between the economies of the two countries have been deepened,so conflict in oil
will be of no good to either of them.

Question: Is it that the US is no longer dependent on the oil supply from the Middle East?

Answer: Yes. In the aggregate of the US oil import that part from the Middle East has decreased sharply to only
taking up one fourth at present. There are over 60 countries exporting oil to the United States. Half of the US crude
oil is from America.
Although Saudi Arabia remains the number one exporter to US, it is closely followed with such American countries as
Mexico, Canada and Venezuela. The United States also imports 15 % of its total demand from Africa. In addition,
European countries (such as Norway and Britain) also provide about 7 % of the US total consumption.

Question: Now what is the biggest concern of the US experts in energy resource security?

Answer: The United States has been less dependent on oil from the Middle East, but globally, the Middle East is still
in a pivotal position. And this is the US greatest worry.
Once the situation in the Middle East fluctuates, for example, the facilities of Saudi Arabia oil production and
export suffer from attacks by massive terrorism, the world's oil security would be severely sapped and the soaring
oil price would undermine the world economy, in which the US, of course, can not be an exception.

Question: What response did the US government make?

Answer: That is to cut down as much as possible its dependence on the Middle East, develop the oil sources in
diversified ways, including a bid to import oil from Caspian Sea basin in Russia and Western Africa etc. while
efforts are being made to increase the nation's strategic oil reserve in order to ensure the supply in case of
crisis.
The US government published recently a policy circular on some energy issues, in which reduction of oil dependence
was more stressed, and devotion to developing alternative energy resources such as natural gas, solar energy and wind
energy, was advocated.

Question: What do you think China should respond to the energy challenge?

Answer: China can do as the United States is doing, i.e. greatly promote various oil providers. Meanwhile, China can
gradually use alternative fuel such as LNG and natural gas. Presently China is consulting with Russia, Kazakhstan and
other regional energy supply groups on establishing long-term cooperation projects in oil and natural gas. These are
wise and farsighted moves.
China needs to formulate a policy to curb the surging oil consumption, particularly in transportation, because it
will be China's major consumer in the future. China can do as the Europe has been doing, to adopt stricter
administrative measures on the development and necessary rein over private cars.
In addition, China needs to encourage actively the saving of energy, strive to organize scientific and technological
research on new mixed fuel cell technology. As China has rich coal reserve, in some industries, China can make an
attempt step by step to get rid off the dependence on oil and turn to coal gas. China may gradually develop
experiment and application of recoverable energy resources including water, solar and wind energy and bio-energy as
well.

Energy security has wide coverage, such as pluralism of energy supply, research and application of alternative energy
resources etc. China may take the initiative to bring those issues to related dialogues held by APEC (Asia Pacific
Economic Cooperation), ASEAN (Association of Southeast Asian Nations) and European countries, the major oil
importers, etc. These countries all have their own experience in energy policy and research on energy technology to
share with China.
In a word, China may develop extensive cooperation in energy with other big oil consumers, and deal together with
them the challenge of energy shortage.